Sequential Formation of Coalitions through Bilateral Agreements
AbstractWe study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any Subgame Perfect Equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 515.02.
Date of creation: 14 Jun 2002
Date of revision:
Coalition Formation; Bilateral Agreements;
Other versions of this item:
- Inés Macho-Stadler & David Pérez-Castrillo & Nicolás Porteiro, 2003. "Sequential Formation of Coalitions through Bilateral Agreements," Working Papers 84, Barcelona Graduate School of Economics.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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